(Commonwealth)__Smaller nations have traditionally grappled with sending their best and brightest abroad through emigration. But new trends say that such displacement is not necessarily a disadvantage and could instead prove a great benefit. Far from being a conclusion, migration might be only the start of a new pattern of expansion and investment—and one instigated by those who left.
Based on the Commonwealth’s July 2025 report, From Brain Drain to Brain Gain: Unlocking Diaspora Finance in Small States, the authors consider how diaspora finance can act as a catalyst. Small states, which are suffering from limited resources, falling aid, increasing debt, and outside disruptions like climate change and pandemics, have no choice but to turn elsewhere for funding. Of these, diaspora finance is the underexploited but game-changing option.
Remittances are already substantial contributors to the economies of nearly all but a few of the small states. Remittances are, for instance, more than 40% of Tonga’s Gross Domestic Product (GDP), whereas others, such as Antigua and Barbados, have smaller amounts. Even at low levels, however, such revenues are greater than those from several conventional industries. But diaspora finance is more than remittances. It includes investments, crowdfunding, diaspora bonds, and goodwill donations—typically motivated by emotional ties rather than merely profit.
Citizens of the diaspora invest in the homeland driven by a desire to contribute back to the nation and become responsible. This affective element, best described as willing to sacrifice on returns for the benefit of country development, is what contributes to the exceptional resilience strength of diaspora finance. It is a type of capital that combines patriotism and mission.
Other examples show this promise. Pakistan‘s Remittances Initiative eased the transfer of funds and encouraged foreign citizens to invest in local enterprises. Tonga’s remittance web page simplified remittances, lowering costs of transaction and prolonging local effects. These changes demonstrate the transformation of diaspora remittances from survival aid to strategic development tools.
Diaspora communities are also actively pursuing climate resilience. Most vulnerable to climate change are small states, yet they have no global climate finance access. Redressing this inequality, diasporas are investing in renewable energy projects, post-disaster reconstruction efforts, and green bonds. These climate-related activities allow small states to generate products of renewable energy and green jobs and construct environmental hazard resilience.
Tourism, a valuable but susceptible industry for the majority of small states, is similarly being revived by returning nationals as diaspora investors. Return nationals are introducing innovation and sustainability through upscale resorts and ecotourism ventures. Others act as unofficial ambassadors, having their countries rebranded for contemporary travelers. Foreign investment in Jamaica and Dominica illustrates how diaspora-driven tourism may bring economic and cultural revitalization.
Among the most promising vehicles in these terms is the diaspora bond—government securities to attract diaspora capital. Israel and India have been enormous successes, while Ghana and Kenya have had more limited successes. The basic tenets are those that come to mind: transparency, trust, and focused marketing. Bonds must meet both the financial and emotional tests of the investors if they are to succeed.
To actually realize the potential of diaspora finance, small states need a plan. It is building diaspora-friendly financial products like property or mortgage schemes, reducing remittance charges, improving electronic transfer systems, and improving business environments with tax incentives and economic free zones. Ensuring diaspora citizens’ rights and open investment systems will also create much-needed trust to believe in it. Even more important, constant exchange via embassies, platforms, and virtual networks is necessary.
Diaspora finance is not a global panacea, but rather a potent catalyst. Foreign institutions do not provide the solution for small countries seeking resilience; rather, forming partnerships with diaspora citizens does. Instead of viewing the diaspora as a loss, it is time to view them as partners and tools of national growth.
